You can write a book review and share your experiences. Other readers will always be interested in your opinion of the books you've read. Whether you've loved the book or not, if you give your honest and detailed thoughts then people will find new books that are right for them.

Tracking the trends 2019
Tracking the trends 2019
The top 10 issues transforming
the future of mining
1
Contents
Solving the value conundrum
03
Trend 1: Rethinking mining strategy
04
Trend 2: The frontier of analytics and artificial intelligence
10
Trend 3: Managing risk in the digital era
18
Trend 4: Digitizing the supply chain
22
Trend 5: Driving sustainable shared social outcomes
28
Trend 6: Exploring the water-energy nexus
34
Trend 7: Decoding capital projects
40
Trend 8: Reimagining work, workers, and the workplace
46
Trend 9: Operationalizing diversity and inclusion programs
50
Trend 10: Demanding provenance
56
Holistic, dynamic, and integrated:
Devising a grand strategy for the future
61
Contacts
62
Endnotes
64
“It appears that the mining industry is poised
for greater growth than it’s seen in a decade,
but today’s market realities are very different
than those of the past. We’re now dealing
with geopolitical tensions in the form of trade
wars and tariff concerns, as well as looming
asset shortages. Rising commodity prices
should fuel expansion, but could also result in
a return of inflation and the costs that go with
it, eventually eating into margins. Disruption
and volatility has become the new normal and
the pace of change is outpacing our ability
to adapt. This makes it imperative for mining
companies to clarify how they plan to drive
value into the future and how they intend to
respond when prices inevitably drop again.”
Philip Hopwood
Global Leader―Mining & Metals
Deloitte Touche Tohmatsu Limited
Tracking the trends 2019
02
02
Solving the
value conundrum
We all know that what goes
up must come down, but
the reverse isn’t always true.
This explains why the recent
resurgence of the mining
sector comes as a great relief.
With a cyclical recovery in the
commodity markets, there has
been an uptick in corporate
earnings, cash flows, and credit
ratings, and a corresponding
drop in debt levels. As a result,
spending is again on the
table, with; mining companies
considering investing in capital
projects and engaging in
mergers and acquisitions.
Mining companies now need
to determine how to operate
in a market characterized by
constant disruption, volatility,
rising stakeholder demands, a
widening talent gap, dwindling
access to key inputs such
as energy and water, and a
Chinese economy growing at
under seven percent, rather
than 12 percent. In this new
world order, miners will not
attract talent, investment, or
community support if they only
focus on communicating the
value that they currently bring
to communities – miners will
need to go a step further and
articulate what they stand for
by developing differentiated
business models designed
to drive long-term value.
Solving this value conundrum
mandates them to
re-envision their corporate
strategy, strengthen their
risk management, and find
better ways to engage with
stakeholders, push the
boundaries on their digital
transformation, attract truly
diverse workforces, and avoid
the capital project mistakes of
the past. It also requires them
to make technology a strategic
priority by acknowledging its
role as an enabler across every
facet of their business.
In Tracking the trends 2019,
our eleventh annual edition,
Deloitte’s global mining
professionals once again
draw on their knowledge and
experience to provide mining
companies with insights they
can leverage in their ongoing
pursuit of productivity,
capital discipline, strategy
development, and sustainable
growth. In addition to sharing
real-world case studies and
best practice examples,
our professionals identify
potential industry disruptors
that may be coming “from left
field”. As ever, we welcome
your input and feedback
and remain deeply grateful
for your years of support.
“To thrive into the future, mining companies will need to challenge
the status quo—and the only way to do this is by soliciting a
diversity of opinions and taking the risk to do things differently.
The fourth industrial revolution represents a new era of business
that can only be harnessed by leaders who have the courage of
their conviction.”
Glenn Ives
Americas Mining & Metals Leader
Deloitte Canada
03
Tracking the trends 2019
1
Rethinking trend 1
mining strategy
Embedding the discipline to deliver
measurable value across the cycle
In the not-so-distant past,
mining companies, large and
small, typically anchored
their strategic planning
around producing the
highest volumes of ore at
the lowest possible cost. In
the process, the concept of
“low cost operations” was
recalibrated—becoming
a function of prevailing
commodity prices rather than
a relentless focus on radically
shifting the cost base. By
now, everyone is familiar with
the result of this approach:
the drive to build ever-larger
04
mines in pursuit of superior
returns, underpinned by the
expectation of constantly-rising
commodity prices. This led to
large amounts of debt being
incurred to fund these projects
with significant write-offs.
Although that bubble has
long since burst, many mining
companies are still grappling
with its strategic legacy. In
essence, they have not yet
sufficiently broadened their
strategic outlook to take a
range of critical industry shifts
into account.
Hearing voices
Yet the industry is in fact
shifting, in ways that many
executives never anticipated.
Consider, for instance,
the rising voices from a
consumer contingent that has
historically been silent. Unlike
retailers, telecommunications
companies, or other consumerfacing businesses, mining
companies have never truly
answered to the broader
“public”. That’s now changing
as users of smart phones
(which contain more than 62
Trend 1: Rethinking mining strategy
different metals1) and drivers of
electric vehicles (EVs)—which
rely on increasingly in-demand
commodities such as lithium,
graphite, cobalt, copper,
titanium, aluminum, nickel, and
manganese2—start questioning
whether the metals and
minerals in their end-products
have been ethically sourced.
Consumers are not the only
stakeholders irrevocably
altering industry dynamics.
Governments and communities
have also become more
vocal over the years. Both
governments and communities
have the power to delay or
even shut down projects if
their needs are not adequately
addressed. As a result,
corporate social responsibility
(CSR) initiatives, which were
once approached as mere
compliance exercises, are now
morphing into stakeholder
engagement programs, and
social license to operate
is becoming a pivotal
strategic issue that will either
differentiate mining companies
or derail them.
May the best asset win
A similar strategic struggle is
taking place at the portfolio level
as mining companies attempt
to select the “best” assets. The
trouble is that, while certain
assets look good on paper, their
return profile is compromised
in practice. A case in point are
world class ore bodies located
in politically risky geographic
regions, where government
demands are taking the form
of higher royalties, resource
taxes, growing requirements
for local beneficiation, and
even reclassification of key
commodities as “strategic”.
An equivalent challenge exists in
regions where key inputs, such
as energy and water, are scarce.
Energy alone can account for
up to 30 percent of a mine’s
total cash operating costs, when
the consumption of grid power,
diesel, liquid natural gas (LNG),
and compressed natural gas
(CNG) are taken into account.3
At the same time, global capital
expenditure on water and
wastewater by the mining
industry is expected to rise
by 23.5 percent, to
US$1.64 billion by 2019.4
Hindered by fluctuating
energy prices and the difficulty
of placing a true value on
water, mining companies
must continually readjust
the relative value of their
individual assets—especially
where their carbon and water
footprints vary from mine to
mine and region to region.
The strategic implications of
this cannot be underplayed.
Making complex choices
In fact, looking at these factors
alone—consumer awareness,
social license to operate,
geographic risk, and access to
input commodities—it becomes
clear that mining companies
must take an ever-expanding
range of issues into account
when setting corporate
strategy if they hope to create
competitive portfolios robust
enough to generate value
across multiple scenarios.
This is especially critical as the
industry shifts into a new stage
of growth.
Strategic thinking in action
In a bid to structure asset portfolios geared towards changing market demands, several
diversified miners are making bold investment, and divestment, decisions. In March 2018,
Rio Tinto completed its exit from coal5 and has since been looking into bulking up on
copper, where high demand is anticipated due to its use by the EV and renewable energy
industries.6 Barrick in its merger with Randgold, has pivoted its portfolio towards tier one
assets defined as low cost assets producing more than 500,000 ounces, with more than
10 years of life.7
05
Tracking the trends 2019
It’s time for management teams and boards to put their portfolios to the test by asking some
hard questions:
• Are we relentlessly
focused on ensuring
the cost competitiveness
of our assets? To what extent
are we embracing digital
technologies to control costs?
• Are we the best owners for
these particular assets?
Can we prove that our
portfolio of assets creates
more value in our hands
than it would in someone
else’s hands?
• Are we thinking about the
future of mining? Can we
identify ways to generate
returns more quickly or
respond with more agility to
shifting demand factors?
• Is
our portfolio robust
enough to withstand the
complex array of industry,
community, and government
risks we face?
• Do we have a response plan
and contingent scenarios
should the regulatory
environment alter?
• Do we have a sufficiently
differentiated strategy
that describes how we
create value for each of
our stakeholder groups,
such as our investors,
customers, communities,
and governments? Why
would a stakeholder group
align with us rather than with
a competitor?
• Can we consistently and
optimally operate our mines,
while adopting necessary
local variations? Or does our
model result in a different
operating model for each of
our mines?
• How actionable is our
strategy? Have we delineated
consistent actions to create
value across each operating
division? Or, is our strategy
confined to the level
of aspiration?
• How confident are we in
our underlying life of mine
models? Are our models
static and based on imperfect
assumptions? Or, are they
sufficiently dynamic to
take commodity, grade,
and ore body fluctuations
into account?
• How are we planning to
rehabilitate our assets,
and how clearly is this
articulated in the market with
our stakeholders?
Strategic thinking in action
Dundee Precious Metals, a Canadian-based gold mining company, acquired a majority
interest in MineRP and combined it with Terrative Digital Solutions, a division of Dundee
Precious Metals, to create a leading technology provider that is well positioned to
further capitalize on rapidly growing demand for digital innovation and integrated
technical mining solutions within the mining sector.8 Goldcorp has partnered with other
mining companies to run a series of hackathons called Disrupt Mining, designed to both
solve mining challenges and spur the growth of an innovation ecosystem within the
mining sector.9
06
Trend 1: Rethinking mining strategy
Delivering on the promise
In rethinking mining strategy, it
is also important to recall that
while value is created at the
portfolio or asset configuration
level, it is only delivered
through rigorous operating
and capital discipline. Although
exceptions exist, the industry
has traditionally lacked the tools
and capabilities required to
sustainably improve productivity
and capital efficiency per unit of
output. Without a super cycle to
lift performance, value must be
found internally.
Notably, some mining
companies are taking steps
to reposition for the future
by revisiting their underlying
business models and making
new strategic investments. While
it remains to be seen whether
those moves will be sufficiently
far-reaching or radical, one
thing is clear: management
teams serious about longterm value creation must put
strategy at the heart of their
board-level conversations.
“When done well, strategic planning cycles
consider a range of issues in addition to
producing at lowest cost, including the role of
individual assets in the portfolio, the path to
value creation, the balance between risk and
return, and how the company is differentiating
itself in the eyes of its stakeholders. These
key choices should ultimately drive a mining
company’s investment allocation strategy,
the partnerships it creates, and the kinds of
capabilities it decides to build.”
Andrew Swart
Global Mining & Metals Consulting Leader
Deloitte Canada
07
Tracking the trends 2019
Leading strategies in focus
Use data to drive strategy
Intuition only goes so far in
setting strategic priorities.
That’s why mining companies
must rely on data to mitigate
unanticipated risks and
overcome longstanding biases.
From a strategic planning
perspective, this means
using data to answer causal
questions designed to align
the management team on the
issues it must tackle. Reliance
on data to drive strategy also
allows companies to shorten
the strategic planning cycle
and set up feedback loops
between geological planning
and financial planning,
reducing project risks at a time
when many miners are looking
to expand their capital spend.
Put strategy to the
stress test
In an age of disruption,
mining companies that fail to
expose weaknesses in their
08
strategy will be at particular
risk. To close strategic gaps,
companies should stress test
their strategy by clarifying
their understanding of their
most coveted customer
segments, their stakeholder
value proposition, their key
performance metrics, and their
risk tolerances. Take some
time to answer the questions
posed on the previous page to
surface any issues that should
be considered.
Consider a range
of scenarios
Scenario planning, enhanced
with artificial intelligence
(AI), can give executives a
structured way to consider
a range of unpredictable
futures, equipping them
with information they can
use to make more flexible
strategic choices. This makes
it particularly useful to mining
companies eager to test the
robustness of their portfolio
strategy using AI to consider
and monitor multiple market
signals. By evaluating multiple
scenarios, on both the upside
and downside, companies
will generally make smarter
funding, asset allocation,
and investment decisions,
particularly if scenario
planning is conducted as a
continual practice.
Trend 1: Rethinking mining strategy
From left field
Tokenization
Tokenization involves converting rights to an asset into
a digital token on a blockchain—and it’s already making
inroads into the mining sector. Goldcorp has begun
to use blockchain to make direct sales to dealers and
banks,10 disrupting the downstream value chain. In
theory, any asset with ownership (e.g., equities, debt,
real estate or commodities) can, and will be tokenized,
raising the prospect of a future where complete mines
or smaller units are tokenized, enabling them to be
traded, and boosting liquidity for miners, far in advance
of actual production.
Mining as a service
The past few years have been characterized by
traditionally asset-intensive businesses transitioning
towards more service-like models (e.g., taxis). Is there a
version for mining where companies sell their technical
know-how and data as a service rather than owning the
underlying assets and infrastructure?
09
Tracking the trends 2019
2
The frontier
of analytics and
artificial intelligence
Moving up the maturity curve
Industry 4.0 and the increased
connectivity between the
physical and digital worlds,
represent opportunities to
explore massive amounts
of information, do it quickly,
and distribute knowledge
wherever it needs to go. Yet,
as information floods into
businesses, data volumes
are going through the roof.
Every day, the world creates
2.5 quintillion bytes of data,11
ranging from structured data
to more truculent forms of
unstructured data from sources
such as video, photographs,
and text. These shifts are
not only driving operational
improvements, they are also
changing expectations for
10
adding insight, and raising
analytical challenges many
organizations are unprepared
for, both from a technology and
talent perspective.
Mining organizations have
started tackling this challenge.
They are exploring and investing
in analytics and AI in a bid to
leverage the data they generate
and use it to sharpen planning
and decision-making across the
mining value chain—to improve
safety, increase productivity,
reduce cost, or enhance the
employee experience.
Yet, despite these
improvements, there is still
a long way to go.
As mining organizations seek to
enhance their analytics and AI
maturity, they are asking three
key questions:
• What are the global trends
in other industries, and how
are they relevant for us?
• What are the specific use
cases in mining, and what
value do they deliver?
• Where should we focus our
investment, and how do we
approach the work?
Trend 2: The frontier of analytics and artificial intelligence
Global trends: Three horizons of AI
AI can be simply defined as machines performing
tasks that require human intelligence. As we
enter an era where intelligent machines work
with humans, rather than replacing them, three
horizons of AI are emerging (see figure 1).
To date, most organizations are working in
Horizon 1, where machine intelligence requires
human assistance and interpretation (e.g., robotic
process automation). Yet leaders in this space
are moving towards Horizon 2, where machine
learning is used to augment human decisions and
drive cognitive insights.
Figure 1: Three horizons of AI
Horizon
2
Horizon
3
Horizon
1
Autonomous intelligence:
Assisted intelligence:
Required human assistance
and interpretation
(e.g., Robotic process automation)
Augmented intelligence:
Machine learning augments
human decisions
AI decides and executes
autonomously
(e.g., Fully autonomous vehicles)
(e.g., Intelligent automation,
cognitive insights)
Source: Deloitte Analytics and Cognitive practice
But first, some definitions:
. Artificial intelligence (AI)—machines performing tasks that require human intelligence,
where data interacts with analytic algorithms. Examples: understanding language, decision
making, learning and problem solving.
. Machine learning—an approach to building AI that involves “training” algorithms with large
volumes of data which evolve the algorithm without it needing to be explicitly programmed.
Examples: clustering and segmentation.
. Deep learning—a machine learning technique where “learning” algorithms use deep
neural networks that mimic the brain’s ability to respond to varied stimuli. Examples: image
recognition and voice recognition.
. Natural language processing—machines that extract or generate meaning and intent from
text in a readable, stylistically natural, and grammatically correct form. Examples: translation
software and virtual digital assistants.
11
Tracking the trends 2019
To move up the analytics
maturity curve into Horizons 2
and 3, organizations must
gain the ability to answer
progressively more complex
questions. The first is “what
happened?” and, because it relies
on retrospective data analysis,
it tends to be the easiest
to answer.
The second is “why did those
things happen?” and allows
organizations to identify root
causes—for example, to
assess why production fell off
during a particular shift, day,
or week; why safety incidents
spiked; or why environmental
performance slipped (was it
operator inefficiency? time of
day? weather-related? something
else?). To answer the “why”
question, mining companies
must be able to integrate
multiple and typically, disparate
data sets to identify the internal
and external levers that
influence these outcomes.
Figure 2: From descriptive to prescriptive analytics
Descriptive
Data
Predictive
Information
Descriptive analytics
Encompasses statistical methods
to understand the trends and
patterns in the data.
Knowledge
Predictive analytics
Employs machine learning
algorithms to learn from the patterns
in the data and forecast future trends.
Prescriptive
Insight
Source: Deloitte12
12
Prescriptive analytics
Embeds the predictive models into
an organization's analytics layer
to enable decision support.
Only with this foundation in
place can organizations answer
the third question: “what will
happen?” This is the key that
empowers organizations to
predict variability, mitigate
emerging risks, and manage
stakeholder expectations.
It is also the springboard
organizations can use to move
from predictive analytics
to prescriptive analytics,
positioning them to answer the
“how” question (see figure 2).
Trend 2: The frontier of analytics and artificial intelligence
Analytics in action:
Mining use cases
To see what type of value or
business outcomes analytics
and AI can deliver, and which
processes across the value
chain they can affect, it’s
helpful to review several
mining-specific use cases.
Mining operations
Using machine learning to
optimize blasting operations
Processing plants need to
be set up to deal with the
high variability in the size
of fragments created from
blasting, and consistent
fragment sizes enable more
efficient processing. A drill
and blast operator used
machine learning to identify
geologic similarities with
previously blasted deposits
and the results of those
blasting operations, allowing
classification of rock mass
to be improved to optimize
blast design and achieve a
more consistent particle size
distribution. This greater
consistency enabled more
efficient plant operation,
increased capacity, and
reduced operating costs.
Using machine learning and
IoT to manage haul truck
movements
A global miner’s haul trucks
that operate within the
pit were often observed
queuing at the crusher
and shovels. Analysis of
truck fleet data revealed an
uneven distribution of haul
trucks between shovels.
This resulted in longer cycle
times and truck bunching.
Through the adoption
of machine learning and
Internet of Things (IoT),
truck cycle efficiency was
improved, resulting in
greater capital utilization
and increased annual
material movement.
Processing
Using prescriptive modelling
to optimize process plants
Process plants require
constant operational
adjustments to maintain
steady process performance
and quality output given
varying inputs. Deloitte
has worked with several
resource companies to
build prescriptive models
that optimize a range of
process plant activities—
including predicting input
ore quality, recipe selection,
operational set points, and
process outputs. Operating
plants optimally also leads
to reduced downtime
and improved equipment
utilization. Across various
projects, observed results
have included reduction
in unplanned stoppages,
accuracy improvement in
input grade prediction,
reduced variance in
production output and
processing time, increased
throughput rates and
processing yields, and
energy cost reductions.
Maintenance
Using real-time monitoring
and machine learning for
maintenance planning
A major miner mounted
a camera on its trains to
monitor its railway tracks’
condition in real time. By
uploading these video
images to the cloud and
using machine learning
to analyze this constantly
changing data, the company
can now generate daily
reports on the status of its
train tracks, allowing it to
both fix immediate issues
and schedule preventative
maintenance in advance of
potential breakdowns.
Using machine learning to
predict car dumper faults by
anomalous behavior
At port, the ore unloading
process is carried out by
car dumpers. For one
major mining organization,
the clamps represented
one of the biggest failure
modes of the car dumpers.
Hydraulic unit failures were
directly associated since
the clamps are hydraulically
actuated. The low and
high pressure bands that
increased the probability
of mechanical, hydraulic,
and electrical failures
were identified, allowing
models to be built to detect
pressure anomalies and
generate alerts, reducing
unscheduled equipment
delays and increasing
production capacity.
13
Tracking the trends 2019
Safety
Using advanced analytics to
identify patterns in safety
data and gain insights
Safety observations and
reports are typically
collected and stored in a
semi-structured way and are
then archived, while actions
based on root case analysis
typically only occur after
the accident has happened.
By applying advanced
analytics techniques to
a range of data sources,
it is possible to process
hundreds of thousands of
observations and detect
relevant patterns, leading
to more proactive safety
approaches. A major
global miner applied this
approach to its capital
projects—various data
sets, including rosters,
risk registers, and weather
patterns were identified,
sourced, and combined,
and a range of advanced
analytics techniques,
including machine learning
and predictive analytics,
14
were then leveraged to
identify patterns and gain
pertinent insights. The
analysis identified the
extent to which factors
such as the day of the week,
hours worked, or weather
conditions increased
likelihood of a safety
incident occurring.
Other use cases
Using wearable sensors and
machine learning to improve
workforce performance
ThoroughTec Simulation—a
global supplier of surface
and underground mining,
military, and construction
simulators—leverages
machine learning as part of
its workforce performance
analysis tool, which uses
wearable sensors to analyze
mine operator performance
in real time and generates
insights mine managers
can use to identify gaps in
operator capabilities and
adjust training to meet each
employee’s needs.13
Using machine learning
and neuro linguistic
programing (NLP) to autoclassify tax deductibles
A global mining and metals
organization is now using
analytics to support its
income tax compliance
processes and enhance
its tax governance.
The analytics solution
automated transaction data
extraction, automatically
classified transactions for
income tax purposes, and
presented the analysis in an
easy to understand visual
format that could be easily
interrogated and adjusted.
By using machine learning
to mimic human cognition,
the digital tax solution
automatically classifies 97
percent of transactions
with a high level of
accuracy. The solution
does the hard, repetitive
work, freeing up time for
the tax teams to focus on
higher value activities.
Trend 2: The frontier of analytics and artificial intelligence
Where to invest and
how to work
As mining companies move up
the analytics and AI maturity
ladder, success will hinge on
their capacity to:
. Think big: establish a clear
vision and strategy, driven by
desired business outcomes;
. Start small: design and deliver
in rapid agile sprints, starting
with a minimum viable product
or solution; and
. Scale fast: rapidly scale up
successful projects that have
demonstrated value (and killoff those that don’t), and focus
on embedding the change
operationally.
Another important
consideration for all
organizations embarking
on digital transformation is
the “talent crunch”. We are
observing talent models
increasingly tilting toward data
science and business partnering
skills. As companies seek to
upgrade their workforces in
all areas, they are placing a
premium on people who have
relationship and analytical
skills, combined with an
understanding of the business.
Many organizations do not
have the right people in place
to make this shift. Training
and development can help,
but the need to recruit for
new skills is taking on urgency,
and new approaches will be
needed in talent attraction
and development, and
organizational planning.
After selecting the right use
cases, and considering the
talent issues, there are several
strategies described below
which will help organizations
“think big, start small and scale
fast”. The key is to get on with
solving real problems and
delivering value as quickly as
possible, while keeping the big
picture in mind.
“Experience shows that the majority of early analytics use
cases have been targeted point solutions, which deliver
value in only one part of the value chain or at only one
operation. Increasing analytics maturity requires greater
integration of data from multiple sources, and delivery of
end-to-end planning and decision-making solutions that
span multiple processes and operations.”
Paul Klein
Consulting Partner
Deloitte Australia
15
Tracking the trends 2019
Leading strategies in focus
Integrate and evolve
Increasing analytics maturity
requires greater integration
of data from multiple sources,
and delivery of end-to-end
planning and decision-making
solutions that span multiple
processes and operations.
This ultimately requires
a data and infrastructure
platform with the ability
to capture consistently
sourced and reliable data, the
responsiveness to support
a complex network of data
flows—including internal and
external data available in both
structured and unstructured
formats—and the scalability
to enable deep-dive analytics
across large data sets, while
still evolving in tandem with
business needs. Although it is
necessary to have a big picture
to work towards, it is better
to build the foundational data
and infrastructure platforms
in an evolutionary way while
delivering specific use cases,
rather than trying to build it
all up-front. Legacy attempts
to do the latter which can take
too long to deliver value.
Leverage next-gen
ERP systems
The big picture referred to
above should also take into
account the current state
and future migration path
of back-office systems,
including the move towards
cloud-based ERP solutions
and in-memory computing.
16
The latest generation of
these ERP systems now
offer increased reporting
and analytics capabilities,
and the integration of ERP
and non-ERP data will be a
critical consideration in the
delivery of more mature
analytics solutions.
Embed the change
The successful adoption
of more mature analytics
capabilities requires topdown leadership support if
changes are to be embedded
in operational processes.
Equally important is buyin from operational and
functional people whose
roles will be affected—they
need to be sufficiently
involved and engaged in the
delivery of the solution to
understand and believe in
the benefits of the change.
Create a virtuous circle
To build analytics maturity,
it makes sense to roll out
analytics initiatives in a way
that develops capabilities
within the organization. Use
cases can be selected to
leverage and enhance internal
skillsets—supplemented by
specialist external expertise
where necessary—so that,
over time, the company gains
the capacity to execute on
progressively wider-ranging
and more complex initiatives.
Trend 2: The frontier of analytics and artificial intelligence
From left field
Imagine a future where mining companies can
identify ore bodies in greenfield and/or remote areas
without access to pre-existing geological data. Thanks
to the power of AI, that future is here. EARTH AI uses
machine learning to analyze geophysical data to
identify unexplored mineralization opportunities in
Australia. Since April 2018, it has discovered 18 new
greenfield prospects with significant copper, zinc,
lead, and vanadium mineralization.14
17
Tracking the trends 2019
3
Managing risk
in the digital era
Exploring a new approach to
controls and risk management
Risk. It’s rare that four letters
can embody a spectrum of
such unpredictable and sudden
shifts. Yet these are precisely
the conditions that prevail in
today’s mining industry, where
the current risk landscape is
characterized by mounting
tariffs and sanctions, potential
trade wars, cyber threats
arising from unexpected attack
vectors such as equipment
sensors, uncertain tax and
royalty regimes, rising input
costs, heightened scrutiny from
the investment community,
environmental disasters and
infrastructure breakdowns that
can result in mine shutdowns,
public protest spurred by viral
18
social media campaigns, and
the geopolitical perils that
come with operating in less
stable regions.
In just a rough sampling, recent
months have seen the U.S.
impose tariffs on US$200 billion
of Chinese goods, including
bismuth, titanium, and
cobalt;15 increased royalties
imposed on copper, gold,
and cobalt, which has been
declared a strategic metal by
the Democratic Republic of
Congo;16 the introduction of two
new laws in Tanzania asserting
the government’s “permanent
sovereignty” over its natural
resources;17 and audits by
the Zambian government
of the past six years of
mining company financial
statements, resulting in First
Quantum Minerals receiving
a controversial US$7.9 billion
tax bill.18
The velocity of risk further
complicates matters. An
interconnected global
economy means risks are
rarely confined to national
borders, mandating a rapid
and coordinated response.
Despite this, many mining
companies continue to address
risk as a tractable concern,
using risk registers to rank risks
Trend 3: Managing risk in the digital era
from high to medium to low,
taking a compliance-based
approach to risk assessment,
using cyclical three-year plans
to identify trouble spots,
and relegating internal audit
to a mere policing function
responsible for risk assurance
rather than the anticipation of
emerging risks.
The danger here is obvious.
Risks unidentified are risks
unmanaged, leaving exposures
that could compromise
a company’s financial
performance, health and safety
record, and social license to
operate. It doesn’t help that
many risks were inconceivable
just a few short years ago. For
example, a mining company
that decides to enhance
transparency by providing realtime results on its emissions
data might find itself at risk of
having that data manipulated
by malicious parties. Similarly,
the prospect that automated
equipment, from vehicles to air
vents, could be hacked raises
risks that are all too real.
A new value proposition
To stem this tide, it’s time for
mining companies to take their
cue from organizations that
take a more holistic view of
risk. Increasingly, these leaders
are moving towards the next
generation of internal audit,
Internal Audit 3.0.
As with any useful new release
of an operating system or
application, Internal Audit
3.0 offers new features and
functionality, and retains the
best of past versions. Internal
Audit 1.0 was marked by the
founding of the Institute of
Internal Auditors in 1941.
Internal Audit 2.0 grew from the
impact of Sarbanes Oxley on
the accounting profession.
Internal Audit 3.0 is being
shaped by a range of other
drivers, including the speed
at which organizations are
now expected to evolve and
innovate as we enter the fourth
industrial revolution. This
greater pressure to create and
deliver value compels internal
audit to adopt a new vision of its
role, one centered not only on
delivering assurance and advice,
but also on anticipating risks
and helping the business craft
preventative responses.
At the heart of this next
generation of internal audit and
risk, lies analytics and a range of
AI and cognitive tools that are
now available and accessible to
mining companies.
Rather than use people to
perform audits on a rotational
basis, internal audit firms
can now use digital assets,
such as analytics, robotic
process automation (RPA),
and AI. Core assurance can
additionally be automated
and non-conformance
identified where controls
can be flagged in real time.
With unparalleled access to
enterprise-wide information
and growing capabilities to use
external data, management
and boards should use these
tools to anticipate risks, moving
firms from a backward-looking
view that reports on what
went wrong to a forwardlooking function that prompts
awareness of what could
go wrong, and what to do
about it, before it happens.
19
Tracking the trends 2019
The complexity of geographic,
regulatory, environmental,
operational and compliance
risks have never been greater.
While temptation on the
part of management is to
add additional cost to their
overhead structures, it is
important that the digital
trend that is taking hold in the
operations of mines is extended
into the back-office, and the
use of analytical and AI tools
are embraced to re-invent how
mining companies manage risk.
Ultimately, this approach should
help mining companies address
risk at an enterprise-wide level,
rather than assessing isolated
risks at the functional or mine
site level, and allows companies
to develop appropriate
controls to both mitigate
and manage the expanding
array of risks they face.
“In today’s broadened risk landscape, where
traditional assurances around risk are no longer
effective, boards, investors, and communities expect
mining companies to have a forward-looking view
on risk. Rather than simply defining risks, companies
should revisit their approach to risk management to
ensure that all lines of defense are empowered to
manage risk on their behalf.”
Sandeep Verma
Global Mining & Metals
Risk Advisory Leader
Deloitte US
20
Trend 3: Managing risk in the digital era
Leading strategies in focus
See the future
Leading organizations
increasingly rely on risk
sensing platforms to monitor
risk indicators based on
internal and/or external
data. For example, many
organizations monitor social
media for customer sentiment
and reputational risks, or
newsfeeds and regulatory
filings, and apply analytics
to identify themes and
trends. Industrial companies
monitor central bank policies
to anticipate interest rate
movements. Others look for
financial, operational, or cyber
trends. Risk sensing, which
combines advanced analytics
with human judgment,
provides a panoramic view of
risk, extending well beyond
traditional risk registers of
identified risks. It focuses on
emerging, often unknown,
risks to enable anticipation of
issues, as well as real-time and
continuous risk assessment.
Reduce the level of
unknown unknowns
Risk learning, or cognitive risk
anticipation, applies analytics
to risk events to tease out
causal relationships. If a risk
event occurs, analysts can
examine what else occurred
before, during, and after
the event. Over time, by
applying pattern recognition
and root cause analysis to a
growing database of events
and factors, the organization
can isolate correlations,
sequences of events, and
causes and effects. This allows
management to take proactive
steps to avoid or mitigate
risk events, while positioning
internal audit to conduct
proactive assurance work
related to those steps.
Raise accountability
One way to link risk
management to real-world
controls is by making
management and the board
directly accountable for
risk assessment. This could
take the form of asking
management for a signed
declaration, similar to financial
statement certifications,
providing assurance that
appropriate systems and
controls are in place to
mitigate specified risks. While
this represents a major shift in
how executives and the board
think about risk management,
it makes the process real in a
way that mere reliance on an
enterprise risk management
(ERM) system does not.
Skill up
To effect true change, internal
audit functions need, what we
call ‘purple people’—people
with a mix of business and
technology skills that allow
them to understand new
cognitive technologies in a
business context. They may
also need access to polymaths,
experts who can ask the
right questions, understand
stakeholder needs, and
embrace new ways to
provide assurance.
Organizations struggling to
attract this caliber of talent
may want to borrow internal
audit staff, source subject
matter experts for specific
engagements, or even cosource or fully outsource their
internal audit function.
Go outside
Risk registers are often
developed at the operating
level, which raises risks of its
own. Often, operators either
do not or cannot provide an
objective view of prevailing
risks, due to ingrained biases
or the role they personally
played in adopting less-thaneffective controls. To overcome
this challenge, consider
asking external auditors or
risk advisors to conduct an
independent risk assessment.
Learn to share
Within mining organizations,
risk management expertise
tends to be dispersed across
functions and geographic
locations. To strengthen their
risk management culture and
better mitigate common risks,
companies should aim to share
lessons learned and leading
practices across mine sites.
This cultural shift is key.
21
Tracking the trends 2019
4
Digitizing the
supply chain
Why innovation
requires integration
Conversations around the
fourth industrial revolution, or
Industry 4.0, revolve around
the ways in which physical and
digital technologies—such
as analytics, AI, cognitive
technologies, robotics, cloud
computing, and the IoT—are
combining to create digital
enterprises that are both
interconnected and capable
of more informed decisionmaking. To harness the
power of this shift, however,
organizations must determine
precisely where to invest to
maximize their returns. One
area ripe for transformation is
the mining supply chain.
22
A haphazard approach
Unlike industries such as
manufacturing and automotive,
the mining sector still lags
in its efforts to digitize the
supply chain. Despite the
challenges associated with
accessing critical materials
and equipment, particularly
in remote locations, mining
companies rarely approach
their mine site planning, asset
maintenance, and materials
processing and transport in an
integrated fashion.
Although many companies
have begun digitizing discrete
pieces of equipment—such
as their trucks or trains—they
have not extended these
efforts across the entire supply
chain, from pit to port. As a
result, the data they generate
from the technology they have
installed exists in a vacuum—
hampering their capacity to
generate true insights that
could otherwise enable them to
reduce inventory costs through
just-in-time procurement,
enhance asset utilization rates,
and improve their production
outcomes by making their EPC
relationships more dynamic
and responsive.
Trend 4: Digitizing the supply chain
In essence, a supply chain
paradox exists. Although most
mining executives agree that
the supply chain is a top priority
for digital transformation
investments, supply chain
leaders are generally not
consulted when it comes to
making decisions about those
investments. As a result,
supply chain improvements
remain incremental rather than
delivering innovations designed
to optimize mining operations.
The digital supply network
To create a more interconnected
and responsive supply chain,
mining companies need to
stop thinking in linear terms
and imagine instead a circular
system that we call the digital
supply network (DSN). The
distinguishing characteristic
of a DSN is that it is capable
of integrating information
from a wide variety of sources
(e.g., IT/OT sensors, GPS data,
wearables, core operations
data, partnership data) to
predict specific outcomes—
such as equipment wear and
tear, shifting demand signals,
operator behavior patterns, or
inventory levels.
decisions about how to
streamline their supply chains
by investing in targeted physical
technologies like robotics,
drones, additive manufacturing,
and autonomous vehicles. It’s a
virtuous loop, one that employs
real-time data to accelerate
decision-making, enhance
transparency, and enable
collaboration across the entire
supply network.
Armed with this data, companies
can make more informed
Figure 3: Shift from traditional supply chain to digital supply network
Traditional supply chain
Digital supply networks
Synchronized planning
Dynamic
fulﬁllment
Cognitive planning
Quality sensing
Develop
Plan
Source
Make
Digital
Core
Deliver Support
3D printing
Sensor-driven replenishment
Connected
customer
Digital
development
Smart
factory
Intelligent
supply
Source: Deloitte analysis
As figure 3 shows, digital is at
the core of the interconnected
lattice of the DSN model. There
is potential for interactions
from each node to every other
point of the network, making
communication multidirectional.
Deloitte university press dupress.deloitte.com
For example, drone video
monitoring of remote work
sites enables site optimization
analytics to detect emerging
issues, while on-site 3D printers
rapidly replace needed parts to
reduce downtime.
23
Tracking the trends 2019
The digital supply network in action
To reduce costs and enhance supply chain agility, EasyJet employs augmented reality smart
glasses to enable two-way communication between its network of remote maintenance
technicians and its central engineering team. Virtual step-by-step walkthroughs in real
time enable technicians to effectively perform complex maintenance tasks and reduce
downtime. EasyJet also uses drones to perform efficient and immediate visual safety
inspections of the exteriors of its plane bodies, reducing the time the plane is out of
service, how much hangar space is required, and the amount of inspection labor.19
The last mile
To enable this multidirectional
communication, the flow of
information across the nodes
of the supply network must
occur through an iterative
series of three steps, known
as the physical-digital-physical
(PDP) loop. In a nutshell,
here’s how it works:
First, information is captured
in the physical world—through
ERP or CRM systems, or even
email—to create a digital record.
Next, that data is analyzed to
draw meaningful insights. Finally,
those insights are used to spur
action in the physical world. The
result is a more flexible system
capable of adapting to and
learning from changes to the
environment (see figure 4).
Although most mining
companies have the first stage
of the PDP loop in place, and
many have the second, far fewer
are yet able to harness the last,
most important stage—the
ability to act on the data they
have analyzed. In fact, some
research shows that miners
may use less than one percent
of the data they collect from
their equipment.20
incremental improvements, a
cultural shift must take place—
one that empowers executives
to make decisions by relying on
data outputs rather than on gut
experience. This is ultimately the
nirvana of the DSN—the ability
to leverage advanced algorithms,
AI, and machine learning to
turn data into insights that
allow companies to reduce
their capital expenditures,
respond to changing project
requirements on the fly, and
optimize mine planning to
integrate real-time changes.
Before the industry can use the
supply network to fuel growth,
rather than merely driving
“The mining sector is at the earliest stages of building a digital supply
network—which is both a risk and an opportunity. Those organizations
that crack the code around fully interlinking their supply chains can do
more than break down operational silos. They can also gain the end-to-end
visibility they need to enhance their asset utilization, operational efficiency,
and productivity—realizing hard dollar savings as a result.”
Kevin Xu
Mining & Metals Leader
Deloitte China
24
Trend 4: Digitizing the supply chain
Figure 4: The physical-digital-physical loop
2. Analyze and visualize
Machines talk to each
other to share information,
allowing for advanced analytics
and visualizations of
real-time data from
multiple sources
1
2
Digital
Physical
1. Establish a
digital record
Capture
information
from the physical
world to create a
digital record of the
physical operation
and supply network
Source: Center for Integrated Research
3
3. Generate movement
Apply algorithms and
automation to translate
decision and actions
from the digital world
into movements in the
physical world
Deloitte insights deloitte.com/insights
The digital supply network in action
To gain an integrated view of its entire operation, Australian iron ore miner Roy Hill
implemented an IoT-based platform that streamlines its demand chain planning,
inventory tracking, quality management, and capacity simulation. By interconnecting
its systems across pit, port, and rail, the company has optimized the flow of parts,
contractors, and equipment to maximize availability and improve supply chain
performance. It also centralized its maintenance planning and engineering services, and
brought all its supply system functions together—vastly enhancing collaboration across
its extended enterprise.21
25
Tracking the trends 2019
Leading strategies in focus
Think big
Often the first step in
transforming a supply chain
into a DSN is understanding
what drives the need to
differentiate. This positions
organizations to examine
the supply chain applications
best suited to their business
objectives. The key here
is to understand the art
of the possible before
determining how to build
the digital maturity required
to reach the organization’s
goals. It can be useful in
this regard to build a digital
committee, foundry, or factory
responsible for defining the
organization’s data acquisition
approach, core platform,
and project milestones.
26
Start small
To make the transition to DSNs
manageable and realistic, it
often makes sense to start
with smaller stakes, where
strategies can be tested and
refined with relatively fewer
consequences. Selecting
projects at the “edges”
of the organization can
provide greater latitude for
building DSN capabilities.
Close the PDP loop
The true power of a
DSN comes from its
capacity to integrate data
generated across all areas
of the enterprise—from
geographically dispersed mine
sites to back office functions
to the executive suite.
Although this may require
additional investment in digital
technologies, many companies
can likely leverage the tools
already at their disposal—such
as IoT data collection, ERP
systems, social media listening,
and predictive modeling. To
maximize their return on
investment, organizations
may want to first build on
these existing capabilities so
they can identify areas where
targeted investments are
truly required.
Trend 4: Digitizing the supply chain
27
27
Tracking the trends 2019
5
Driving sustainable
shared social
outcomes
Finding value beyond compliance
For several years, we have
featured variants of this trend
in this publication. In the past,
we have highlighted the need
for companies to put their
Corporate Social Responsibility
(CSR) efforts at the heart of
their strategy, we raised the
need for different engagement
models and we have spoken
about the holistic nature of
the resources that need to be
optimized in relation to the
community. This year we focus
on the need for the creation
of shared value, a concept that
has been around for a while,
but one which has yet to be
embraced by the wider industry.
28
Mining companies have long
recognized the imperative
of earning a social license
to operate. To gain the trust
of local communities in
regions around the world,
companies have invested
billions of dollars building
local schools, hospitals, and
infrastructure, and supporting
communities through local
procurement and employment.
Yet recent years have amply
demonstrated that these
investments frequently fail
to yield their desired results.
In many regions across both
developed and developing
economies, local communities
remain vehemently opposed
to mining activities, and
continue to demonstrate their
opposition through refusals to
negotiate, lockouts, protests,
and outright violence.
Clearly, there is a disconnect
here, which may stem from
miners’ historical approach to
corporate social responsibility.
The issue? Until recently,
mining company social spend
has been seen as a cost of
compliance, rather than a way
to deliver measurable and
sustainable benefits to host
countries and communities.
Trend 5: Driving sustainable shared social outcomes
If mining companies hope to
drive different social outcomes,
that dynamic has to change.
The rise of the social
enterprise
This profound shift is not
confined to the mining sector.
Today, organizations across
industries are being assessed
on metrics that extend far
beyond financial performance.
Rather, they are being judged on
the basis of their relationships
with their workers, customers,
communities, and regulators—
as well as their impact on society
at large—transforming them
from business enterprises
into social enterprises.
A social enterprise is an
organization whose mission
combines revenue growth and
profit-making with the need
to respect and support its
environment and stakeholder
network. This may sound like
altruism, but it’s not. Mining
companies that fail to live up
to these expectations not
only stand to lose their social
license to operate, but expose
themselves to financial risks as
well. In fact, operating delays
caused by social conflicts can
cost mining companies more
than US$20 million per week.22
Conversely, mining companies
that enter community
benefits agreements—in
which communities consent
to new investments in return
for tangible benefits, such as
revenue sharing—can see their
market value double under
certain conditions.23
Common ground
Yet finding value beyond
compliance is no easy task. It
requires miners to listen more
closely to their constituents to
determine what stakeholders
truly want, and then to shift
their operational processes in
response. Rather than trying
to “buy” a social license to
operate through community
investments, for instance,
mining companies may need to
integrate local manufacturers
into their supply chains or alter
their water use policies.
They will also need to take steps
to help sustain community value
beyond a mine’s closure. The
approaches adopted to make
this happen will necessarily
vary from region to region.
Some best practices include
educating local communities on
health-related issues so they
can reduce the incidence of
preventable illness and disease;
providing communities with
financial training to build viable
businesses; leveraging existing
infrastructure to create new
economic activity and reskilling
local workers in alternative
industries, such as agricultural
production, which can help
them thrive once local mines
shut down.
Shared value in action
Acknowledging that mining companies are frequently perceived by communities as
being part of the problem, not part of the solution, Rio Tinto recently announced plans
to reshape its image. Through a series of local campaigns, the company is working
to tell a more compelling narrative about its contribution to society in recognition of
the fact that miners cannot secure a future without strong community support.24 The
company is already taking action to stand by this commitment, becoming the first
major mining company to support the public disclosure by host governments of their
mining contracts.25
29
Tracking the trends 2019
A new age of collaboration
To deliver on the social breadth
of these programs, mining
companies cannot work in
isolation. Instead, they should
look for opportunities to
collaborate by pooling resources
with other companies working in
the region.
They should also aim to
strengthen their relationships
with local governments and
regulatory bodies. This may see
them change their traditional
interactions with government.
For instance, rather than
lobbying local governments
for favorable tax treatment,
mining companies may want
to look at the tax incentives
governments already offer
to stimulate local activities—
such as industrialization, job
creation, manufacturing, and
agriculture—and align their
investments to help meet these
public sector priorities, giving
them an alternative route to
spur lasting social value.
Shared value in action
Deloitte conducted a study of six manganese and four iron ore mines in the Northern
Cape of South Africa, a region that struggles with high levels of youth unemployment
and low levels of education. While the mining companies were eager to address the
dire socio-economic conditions across the four municipalities where they work, the
effort was too great for a single-company mandate. Through collaboration, however,
the companies have gained the scale required to improve delivery success and increase
the impact of their programs, which has enabled them to start making strides towards
improving quality of life across the region by contributing to local job creation and
social upliftment.26
30
Trend 5: Driving sustainable shared social outcomes
The litmus test
Although these changing
expectations put greater
pressure on mining companies
to address social problems, they
also create an unprecedented
opportunity to fill the void on
issues from income inequality
to healthcare. Leading
organizations are already rising
to the task. A case in point is
the not-for-profit organization
started by Amazon, Berkshire
Hathaway, and JPMorgan Chase
to lower healthcare costs for the
more than one million people
who receive health insurance
from the three companies.27
Beyond driving sustainable social
outcomes, and boosting financial
outcomes in the process, this
approach can also help mining
companies positively answer a
question that is becoming more
vital: when we look in the mirror
held up by society, do we like
what we see?
“By taking the time to understand local community concerns
and social objectives, mining companies have a unique
opportunity to devise uncommon solutions to intransigent
problems. This positions them to form true collaborative
partnerships, change negative perceptions about the industry,
avert social conflict, and play a more proactive role in helping
local governments deliver on their developmental outcomes.”
Andrew Lane
Mining & Metals Leader
Deloitte Africa
31
Tracking the trends 2019
Leading strategies in focus
Make direct connections
Building relationships with
communities is akin to building
any other relationship—it
takes both time and personal
attention. This makes it
critical for mining company
management to engage directly
with key stakeholders to build
consensus and brainstorm
solutions to shared challenges.
Notably, ongoing technological
innovation is introducing a
range of solutions miners can
use to connect directly with
community stakeholders.
Cloud-based stakeholder
engagement platforms,
for instance, allow mining
companies to more rapidly
address time-sensitive
complaints or grievances, while
enabling more transparent
stakeholder engagement.
Similarly, the proliferation
of mobile phones in remote
communities gives companies
another avenue to connect
with local workers and keep the
lines of communication open.
Correct misperceptions
Part of the mining industry’s
challenge in fostering more
effective community and
government ties links to its
bad reputation. Simply put,
mining companies have not
32
traditionally done a good job
engaging people’s hearts and
minds. This needs to change.
Mining companies must
work harder to display the
positive contributions they
make to community stability,
environmental rehabilitation,
and global economic growth—
so that politicians are properly
informed. They should spell out
the huge range of consumer
products, applications, and
services that wouldn’t exist
without minerals and metals—
and this isn’t just cell phones,
cars, airplanes, and roads.
It’s anything that relies on
electricity, which wouldn’t
run without copper or other
conductive metals. They should
work to make their reports
more user-friendly, digestible,
and emotionally relatable. And
they should encourage their
people to spend more personal
time changing minds—by
visiting local schools, speaking
at non-industry conferences,
and inviting university students
to not only tour mine sites but
to shadow their professionals
who are working at the
leading-edge of technological
innovation.
Plan now for the future
There are few certainties in
life, but in mining we know that
every ore body has a limited
lifespan. Mining companies
need to understand how
they can create a sustainable
economic environment
post closure. The actions
and investments taken now
can help spur new areas of
economic activity which can
sustain these communities
long after the ore body has
been mined out. In many cases,
this is about leveraging existing
infrastructure, but doing so
with closure in mind.
Be transparent
Many countries report
experiencing Gross Domestic
Product (GDP) leakage as a
result of illicit financial flows
and unauthorized commodity
exports. To build goodwill and
enhance transparency, mining
companies could begin to use
blockchain to track the flow of
both their minerals and their
royalty and tax payments,
providing governments with
immutable evidence of their
compliance with local laws.
Trend 5: Driving sustainable shared social outcomes
Share ideas
Given the frequency with
which lockouts and protests
interrupt mining operations,
it is clear that community
dissatisfaction directly affects
shareholder value, creating
a business case for investor
relations and sustainability
teams to collaborate in the
identification of strategies
for engaging communities
in more effective ways.
This may mean redirecting
investment to various local
initiatives, arranging for
executives to spend more time
communicating directly with
key stakeholders, or identifying
opportunities to partner with
other organizations to deliver
greater community value.
Prove it
One of the ways mining
companies are demonstrating
their commitment to local
community initiatives is
through the release of
sustainability reports,
which outline not only their
environmental programs, but
also their local community
contributions, health and
safety performance, and global
tax payments. To add a further
layer of credibility to these
reports, some companies seek
out third-party assurance
for their claims, providing
unbiased proof that they are
walking their talk.
From left field
If miners crack the code on generating value beyond
compliance, and succeed at delivering both financial
returns and making a defined social impact, could mining
companies attract the interest of impact investors? If
so, they could gain access to an impact investing market
currently valued at over US$228 billion.28
33
Tracking the trends 2019
6
Exploring the
water-energy nexus
Making the case for a
systematic approach
As one of the world’s most
energy and water intensive
industries, the mining sector
has long struggled to secure
uninterrupted access to
these critical inputs. In recent
years, this has spurred
companies to action.
For instance, to reduce their
energy costs, which can
account for up to 30 percent of
a mine’s operating expenses,29
many companies have begun
adding renewables to their
energy mix, and electrifying
equipment and processes that
run on fossil fuels.
34
While there is still room
for improvement, progress
is being made. Between
2008 and 2017, Rio Tinto
reduced its greenhouse gas
(GHG) emissions intensity
by 27 percent. Today,
approximately 75 percent of
the company’s energy comes
from hydroelectric, nuclear, and
renewable power sources.30
Similarly, Antofagasta’s Los
Pelambres mine in Chile relies
on renewables to generate
roughly 45 percent of its
energy.31 Most recently, the
company announced that its
Zadívar copper mine in Chile,
which it jointly owns with
Barrick, will begin operating
with 100 percent renewable
energy by 2020—a move
that will enable the company
to reduce its annual GHG
emissions by 350,000 tons.32
As these leading companies
have learned, however,
true value from energy
management can only be
derived by addressing the
triple bottom line of social,
environmental, and financial
performance. This requires
companies to manage their
energy related projects as
Trend 6: Exploring the water-energy nexus
a portfolio and approach
energy management as an
integrated corporate initiative.
Companies that succeed in
this effort can reduce their
energy consumption by 15
to 20 percent in existing
mines, and up to 50 percent
for new mines by rethinking
the mine design with energy
management in mind.33
What about water?
Yet energy is not the only
input at risk. In fact, water
has quickly risen to the top of
mining company agendas as
one of the greatest constraints
to supply. In regions around
the world, mining companies
must now contend not only
with risks around water scarcity,
but also those associated
with excess rainfall, which
can result in flooding.
According to the Climate
Disclosure Project (CDP),
25 percent of mining
production, representing up to
US$50 billion in annual revenue,
could face water shortages
and drought by 2030.34
Environmental concerns around
water quantity and quality
are also exacting financial,
operational, and reputational
tolls. Mining companies
around the world now face
elevated regulatory risks
relative to their use of water
and community opposition
that has sparked protests,
operational disruption, and
heightened levels of conflict.
As competition for water
supplies mounts, many mining
companies are taking steps to
reduce water consumption,
treat wastewater so that it
can be recycled, and adopt
innovations such as dry
processing. These efforts,
however, are often approached
as isolated initiatives rather
than enterprise-wide
opportunities to achieve cost
savings, improve environmental
performance, and enhance
regulatory compliance.
Part of the challenge lies with
the fact that mining companies
do not yet have a business
case around reducing water
intensity equivalent to the
one around reducing energy
intensity. As a result, most
companies continue to take a
haphazard approach to water
management—one that fails
to integrate the health, safety,
and environmental (HS&E),
sustainability, and finance
departments, preventing the
identification of cross-functional
opportunities to manage both
water and energy in tandem.
With the stakes rising, it
is becoming clear that a
systematic approach to water
management is required.
Sustainability in action
Goldcorp continues to make strides in the execution of its Towards Zero Water (H2Zero)
strategy. The company has already created a model to calculate the true cost of water
usage in its mining operations, taking infrastructure, energy, and labor costs associated
with extracting, pumping, transporting, storing, treating, and discharging water into
account. Its EcoTails™ system blends filtered tailings with waste rock in transit to create a
geo-technically stable product called GeoWaste—a solution that may help the company
eliminate tailings dams entirely.35 Not content to rest on its laurels, Goldcorp is also
building the world’s first all-electric mine, a move it anticipates will help it reduce its GHG
emissions while saving roughly US$9 million per year on diesel, propane, and electricity.36
35
Tracking the trends 2019
A solid foundation
The good news is that many
companies have already
begun laying the foundation by
tackling energy management
at a portfolio level. Building
on these learnings, mining
companies have a framework
they can adapt to their water
management efforts.
For new mines, this generally
begins by gaining a solid
understanding of available local
water sources by conducting
both hydrogeological and
surface water studies, and
conducting water supply
and storm water modeling,
a critical first step given that
governments in most mining
regions lack baseline data
on local water availability. By
providing mining companies
and regulators with an
understanding of how mining
operations may affect the local
ecosystem, this assessment can
36
help streamline the regulatory
permitting process and enable
companies to put systems
into place to avoid unintended
environmental consequences.
only conducted periodically
and collected data remains
unconsolidated, resulting in
delays in both analysis and
government reporting.
Armed with this knowledge,
companies can integrate
both water and energy
management best practices
into their mine designs. This
may include relying on dry
processing methodologies,
reducing the amount of water
required to store tailings,
and even mining in ways that
reduce impacts to surface
and groundwater systems.
With digital technologies and
advanced analytics, however,
mining companies can measure
and monitor their water flows
on a continuous basis to analyze
water quality, assess their water
intensity, and identify severe
water incidents in real time. This,
in turn, can help them assign a
financial value to water, allowing
them to build a business case
to conserve water (e.g., through
drip leaching or ore sorting),
enhance efficiency (e.g., through
selective mining or high-intensity
blasting, which results in less
water for grinding), and find
alternatives to the use of fresh
water (e.g., through desalination
or water recycling).
For mines already in operation,
a good starting point would
involve measuring water
consumption across different
sites and processes to create
a baseline for water costs
across the entire system.
Currently, limited use of sensors
means water sampling is
Trend 6: Exploring the water-energy nexus
Sustainability in action
As part of its FutureSmart Mining™ Sustainability Strategy, Anglo American is gearing
towards the development of a waterless mine. At its Mogalakwena platinum mine in
South Africa, it is using a fibre optic solution to measure mine-wide water flows to gain
real-time insight into its water balance—empowering it to pursue the highest-impact
efficiencies. It has also deployed a fibre optic solution in Chile to monitor its tailings
dams, giving it the capacity to mitigate potential damages that could be caused by
structural movements, long-term deformation, or creeps into dam foundations.37
Riding the upside
There is also a significant upside
that has yet to be quantified
but that unquestionably exists:
reducing water intensity can
help to reduce energy intensity,
and vice versa. By approaching
energy and water management
in tandem, mining companies
can make business choices that
optimize the use of both.
While these changes will not
be easy, they are increasingly
necessary if mining companies
hope to maintain productivity,
lessen community concerns,
and manage their environmental
risks in an energy and water
constrained world.
“With a constant knowledge of how every drop of water is
being used, and an understanding of all the parameters
associated with its use, mining companies can manage
water in the way they have begun to manage electricity,
as a valuable resource.”
Patricia Muricy
Mining & Metals Leader
Deloitte Brazil
37
Tracking the trends 2019
Leading strategies in focus
Start with mine design
The reduction of water and
energy use go hand-in-hand,
it’s essential for mining
companies to understand
the system level implications
of their reliance on these
inputs before they begin
mine design. Armed with this
understanding, they can adopt
design principles that factor
in the local availability of key
resources, supporting dynamic
energy and water planning.
Find balance
In a bid to reduce energy
consumption and intensity,
some mining companies have
begun to take an integrated
approach towards analyzing
their energy usage across their
entire operations. One metric
38
involves the ongoing analysis
of their energy-mass-balance
(EMB), which can provide
organizations with a deeper
understanding of the energy
flows across their business.
A similar approach is possible
for water. Integrated water
and mass balance models can
provide mining companies
with the level of information
they need to assess water
management alternatives,
make informed infrastructure
choices, and adapt to changing
water quantity and quality
conditions. Conducted in
tandem, these analyses can
provide miners with a holistic
view on how energy and
water intersect and shine a
light on where the areas of
greatest impact lie.
Trend 6: Exploring the water-energy nexus
39
39
Tracking the trends 2019
7
Decoding capital
projects
Learning from past mistakes
Although the recent commodity
price meltdown has spurred
many mining companies
to operate leaner, it also
whittled segments of the
industry down. Among the
investments that fell by the
wayside were major capital
projects. Burdened by years of
sub-par returns, cost overruns,
and impairment charges,
many mining companies
opted to concentrate on
maximizing output from their
existing operations rather
than investing in new mine
supply and exploration.
As a result, industry capital
expenditures in new
developments in 2017 fell by
almost two-thirds compared
to the US$80.8 billion peak of
40
2012 (see figure 5). Grassroots
exploration spend is at historic
lows, while headcount and
internal project capacity have
seen cutbacks in response to
cost-reduction strategies.38
Reframing reserve
replacement
The consequence was
inevitable: supply shortages for
commodities such as copper,
zinc, cobalt, lithium, and gold
now loom, and no amount of
squeezing of current deposits
will cover the shortfall.
With the cycle turning, mining
companies will need to engage
in a wave of new capital
projects to offset production
declines and meet demand, a
prospect that raises concerns
among mining executives,
boards, and investors alike.
The worry is understandable.
After all, this is an area that
has traditionally been value
destructive to the industry. Yet,
despite their concerns about
realizing sustainable returns,
miners cannot avoid putting
off capital project investments
indefinitely. Instead, they
must learn from the mistakes
of the past by approaching
capital projects with a new
frame—one that sees them
honing stronger organizational
capabilities across their entire
portfolio of projects rather
than reinventing the wheel
and assembling new teams on
a project-by-project basis.
Trend 7: Decoding capital projects
Figure 5: Mining industry greenfield capex
90
80
70
60
50
40
30
20
2021e
2020e
2019e
2018e
2017
2016
2015
2014
2012
0
2013
10
Note: Mining capex has declined heavily since the US$80B+ peaks of 2012.
Our analysis, based on company capex guidance and market sentiment,
indicates that capex is increasing even with a modest growth rate,
investment could exceed US$40B in 2020.
Source: S&P Market intelligence, Deloitte analysis
Building on their strengths
In fairness, they’re not starting
from a zero base. Stricter capital
allocation frameworks mean
investment decisions are now
more rigorous, with heightened
scrutiny of business case risks.
More centralized business
models facilitate greater
control of capex. Significant
industry investment in digital
innovation also promises to
drive operating efficiencies.
But the goal posts have
moved too. A lack of shovelready projects in “friendlier”
jurisdictions is forcing miners
to move up the geopolitical risk
curve, often exposing them
to heightened government
expectations and resource
nationalism, and putting
pressures on project margins
and viability. Consolidation
of major engineering,
procurement, construction
management (EPCM)
contractors has left fewer
suppliers to meet the growing
demand. Lower headcounts
in owner project teams is also
leaving skills gaps.
Capital project capacity in action
The Tideway project is a near US$6 billion investment in the delivery of a 25 kilometer
tunnel, 65 meters below the River Thames in central London. To enhance delivery
success, the project team established a new standalone entity to manage the needs
of multiple external stakeholders. The target operating model design considered the
organization’s capability requirements at key phases of the project’s lifecycle, focusing
on the optimal owner’s team structure and core in-house capabilities needed. This
innovative delivery model allowed the right capabilities to be in place at the right time.39
41
Tracking the trends 2019
Five areas of focus
To overcome these challenges,
mining companies must build
their maturity in five key areas:
Delivery models
While mining companies have
traditionally relied on EPCM and
engineering, procurement and
construction (EPC) companies
to deliver major projects,
they have often struggled
to effectively manage these
relationships. Ultimately, the
delivery model selected should
determine the project team’s
set-up, where accountability lies,
and how risk should be shared
among delivery partners. This,
in turn, should help companies
align incentives with project
and operational outcomes,
consciously build the right
level of capability to deliver
on the project strategy, and
adopt collaborative contractual
mechanisms to drive continuous
improvement throughout the
project lifecycle.
Data and technology
Although mining companies
have the technological capacity
to capture a wealth of project
information, siloed information
systems hamper their efforts to
effectively share this data across
the supply chain. Without a
standardized, cohesive version
of the truth, decision-making is
compromised—resulting in cost
42
overruns. Notably, companies
that build a unified data
model that enables consistent
reporting and predictive
analytics can realize capex
savings of up to five percent.40
Project controls
Today’s major projects are
increasingly complex and under
significant scrutiny, mandating
the adoption of highly-effective
project controls. To get this
right, project controls must
be adopted not only during a
project’s execution phase, but
also during pre-feasibility and
feasibility studies, and during
the transition to operational
readiness. The aim should be to
apply owner-led project controls
across all operating model
layers—including organization,
process, technology, data,
and governance—and to
continuously use them to
monitor project performance
so emerging issues can be
remediated before they can
derail the project.
License to operate
Even with the best delivery
models, data insights, and
project controls, mining
industry capital projects can
still be rushed due to poor
environmental performance,
troubled community relations,
or regulatory non-compliance.
This means capital project
success also hinges on
corporate willingness to
deliver shared value to local
communities and supply
chain partners. To build more
effective relationships, consider
monitoring and transparently
tracking efforts to provide local
communities and suppliers
with an economic dividend,
developing a detailed plan of
commitment activities, and
integrating them into the wider
project scheme (see Trend five
for more detail).
Collaboration
Although mining companies
have taken significant steps
to optimize their portfolios,
they still struggle to respond
to shifting macro-economic
trends, which make long-cycle
megaprojects particularly
risky. Yet rather than sharing
the burden of this risk through
collaboration, many mining
companies continue to “go it
alone”, tying up more capital
over the long term and missing
potential opportunities. To
better share risk and drive
innovation, mining companies
should aim to expand their
partnership ecosystem
by pursuing grassroots
partnerships with juniors and
entering into joint ventures to
uncover new deposits.
Trend 7: Decoding capital projects
Capital project capacity in action
To optimize maintenance costs and production processes for 900 kilometers
of railway, one global miner adopted technologies such as image recognition,
sensor data, text mining, machine learning, and data visualization to enable
predictive maintenance for its rail infrastructure. This allowed it to remediate
emerging issues in a controlled fashion—increasing rolling stock availability,
optimizing asset performance, and reducing the risk of accidents.41
43
Tracking the trends 2019
The upside
After the challenges faced
during the last down cycle,
there is a palpable sense of
optimism for mining companies
as commodity demand picks
up. Before launching into
the next wave of investment,
however, the lessons of the
last cycle must be learned
and the industry needs to
rebuild trust with stakeholders
in its ability to deliver longerterm value. Although this
won’t happen overnight,
organizations that focus now
on putting the right capital
project capabilities into place
can strengthen their capacity
to adjust supply in response
to shifting demand patterns.
Right from the start:
Building digital mines from
the ground up
Capital project planning takes
years, which likely explains why
no digital mines have yet to
be built from the ground up.
However, advances in finance
platforms, sensor technology,
autonomous vehicles,
cloud-based solutions, and
analytics are changing how
capital projects of the future will
be delivered—paving the way for
the design of a digital mine.
44
Some global leaders are already
deploying new technologies
into classic plants to test their
efficacy, mitigate risks, and
strengthen their capacity
to standardize their global
footprints. As the industry’s
digital maturity grows, we may
ultimately see capital project
“superhighways” enabled by
data-driven project planning
and execution, and an
augmented workforce armed
with new capabilities.
The conceptual structure
already exists and would see
mining companies approach
capital project planning by
developing an enterprise-wide
digital strategy directly linked
to business value; automating
operations and digitizing assets
from the outset; eliminating
data silos by establishing
an integrated digital mine
nerve center; implementing
supporting platforms and
enablers; and equipping
their diverse and distributed
workforce with the skills to
operate in a connected fashion.
Most critically, the future is
here. The technologies to make
the digital mine a reality are
currently available, positioning
leading miners to realize new
frontiers of capital project
efficiency and control.
“As capital projects begin to pick up, mining
companies will need to avoid the mistakes of
the past by rethinking their delivery models,
adopting appropriate governance processes, and
ensuring they have the skills in place to manage
performance across the entire project lifecycle.”
Tim Biggs
EMEA Mining & Metals Leader
Deloitte UK
Trend 7: Decoding capital projects
Leading strategies in focus
Get analytical
Thanks to advances in digital
technology, tools now exist
that allow mining companies
to monitor their portfolio
of capital projects at the
operational, tactical, and
strategic levels. By integrating
information from planning
systems onto a single platform,
these solutions can provide
insight into subcontractor
productivity, health and safety
performance, and physical and
financial progress of individual
projects and programs—
positioning organizations
to make more informed
management decisions.
Become digital
To deliver data-centric capital
projects, mining companies
need to shift from “doing
digital” to “being digital”.
This involves investing in
data standards, embedding
a unified data model, and
treating data as an asset by
ultimately setting up a digital
twin to support project success
during the transition to
operations.
Learn from other sectors
To reduce the risk of major
capital projects, oil and gas
companies often engage
in shorter-cycle projects
designed to rapidly generate
a positive cash flow. In
addition to reducing capital
expenditures, these short-
cycle investments help to
preserve production capacity
and ensure portfolio agility.
For mining companies, a
phased approach to the largest
investments could spread risk
in a similar fashion.
Model
Early-stage projects should
be continuously evaluated.
Flexible, driver-based modeling
gives visibility of multiple
“what if” scenarios to support
decision-making in line with
the overarching strategic
vision. Rolling this information
into a single consolidated view
can help mining companies
make decisions that properly
assess macro and project risks
at a portfolio level.
45
Tracking the trends 2019
8
Reimagining work,
workers, and the workplace
A blueprint for the future
Mining executives are no
strangers to shifting workforce
realities. The relentless drive
towards digitization and
automation has altered not only
where work takes place (e.g.,
remote operations/telework),
but also the nature of corporate
talent needs. As highly
repetitive transactional work
is automated, the demand for
people with broad foundational
skills, as well as deep technical
expertise, will only rise.
At the same time, the mining
industry now faces a massive
generational shift. In Canada,
50,000 mining workers,
representing roughly 26 percent
46
of the current workforce, are
expected to retire in the next
ten years.42 With enrolment in
mining-related disciplines down,
filling those talent gaps will be
no easy task. In Australia, for
instance, enrolment in mining
engineering courses fell from
292 in 2014 43 to 171 in 2017,
and is projected to drop to an
alarming 47 by 2020.44
This generational shift is
by no means confined to
frontline workers. Recent
announcements of planned
exits by C-suite executives
have brought the imperative
of succession planning to the
fore and are putting mining
companies under pressure
to more clearly articulate the
leadership attributes they
anticipate will be most vital for
the future.
The very nature of careers
is also changing. Not only
is job and career-hopping
becoming the new norm,
but a younger generation of
workers now measures loyalty
to an employer in months
instead of years. As a result,
mining companies need
strategies for recruiting these
so-called “gig workers”, the
networks of people who will
increasingly form tomorrow’s
contingent workforce.
Trend 8: Reimagining work, workers, and the workplace
The future of work in action
To retain its coveted IT specialists and enhance employee engagement, Norilsk Nickel
in Russia developed an employee motivation solution based on blockchain and the
cryptocurrency WorkCoin. It has used the system to “gamify” the technology innovation
process by enabling staff to “compete” to solve complex problems and earn virtual points,
which can be redeemed for non-monetary awards, such as prizes and promotions.45
Firing on all cylinders
To prepare for this imminent
future, mining companies are
beginning to broaden their
talent strategies. The key
is to consider not only the
shifting nature of work, but to
determine how to attract a new
breed of workers and tailor their
workplaces accordingly.
When it comes to redefining the
future of work, organizations
need to clarify not only their
business goals and aspirations,
but also the role that talent
strategy should play to deliver
on them. This involves looking
at specific tasks within each role
and whether these could be
disrupted by technology, now
or in the future. It also involves
identifying any current talent
and organizational gaps that
must be bridged to support the
future direction of the business.
As a second prong in this
strategy, companies will need
to identify the workers of the
future by considering what the
employee experience will look
like, and the role that innovation
will play in that experience.
Going forward, companies
will have many more options
to choose from to carry out
specific tasks with an ability
to also draw on gig economy
workers, crowdsourcing options
or outsourced talent models.
In making this determination,
mining companies should
consider how employee needs
are changing and which needs
remain unmet. This should
help guide the strategies they
choose to adopt regarding
how to attract and retain top
talent, what partnerships
they must leverage to access
in-demand talent, and who
should manage and lead
the workers of the future.
Third, organizations must
consider what the workplace
of the future will look like.
This means reconceiving
how employees will interact
with each other and conduct
their work, be it in a physical
location or conducting that
work remotely. The technology
infrastructure to enable this
workplace will also change
and new collaboration and
interaction models will
need to be developed.
Throughout the entire
process, companies also need
to think through how they
plan to measure success,
by identifying critical key
performance indicators (KPIs),
setting baselines for employee
engagement, and tracking how
well they iterate their approach
to easily adopt new technology
and scale their initiatives.
47
Tracking the trends 2019
The future of work in action
As miners grapple with the challenge of rebuilding their skill base and developing a
workforce capable of bringing the industry along the technology pathway it needs to remain
competitive, they must find new ways to motivate their workforce. BHP has approached
this challenge with its “Think Big” campaign which, among other things, saw BHP employees
filmed at their workplace and talking about their company.46 The campaign helped to evoke
a sense of pride and commitment, as well as a collective mind-set that gave employees the
authority to “own” problems and challenges, rather than delegating them to someone else.
Inventing the future
In the face of AI, mobile
platforms, sensors, and social
collaboration systems that
continue to revolutionize lives
and workplaces, employees
and organizations are more
overwhelmed than ever. For
the mining industry, already
burdened with a perception
problem among young people
considering career choices, the
need for new and robust ways
of redefining work, workers,
and the workplace is becoming
urgent. Yet, if fortune truly
does favor the bold, mining
executives who adopt new
talent approaches are not just
preparing for the future of work,
but are helping to invent it.
This is not mere posturing and
neither is it contained to just the
back office, all roles including
operational, have the potential
to be disrupted. As the mining
industry prepares for the future
of work, jobs will need to be
disaggregated and broken down
into individual tasks so that
companies can identify the best
resources to complete each
task—whether that’s traditional
employees, outsourced talent,
or digital technology. The ideal
end state is to automate the
tasks that don’t add value, while
giving the right people the
opportunity to complete the
tasks that interest or challenge
them most.
When jobs are broken down in
this way, it becomes clear that
automation is not synonymous
with job loss. Instead, tasklevel analysis gives companies
a tool for properly defining
the jobs of the future. Low
level, manual, or transactional
tasks are automated or
outsourced, and whatever is
left over—including tasks that
contribute to the corporate
mission or relate to core
strategy—can be reconstituted
into new job functions.
Once each task is charted in
this way, mining companies
can begin to build a vision for
their future workforce—roadmapping the skills they believe
will be in greatest demand.
This allows them to become
masters of their own future—
designing programs that enable
them to fill their talent gaps
before competitors have even
identified which gaps exist.
“There are countless tactical steps mining companies can take in setting the
foundation for the future of work. But none of them will be effective unless
the C-suite comes together to define their vision of the future and allocate
resources against that vision.”
Janine Nel
Global Human Capital Energy, Resources & Industrials Leader
Deloitte Africa
48
Trend 8: Reimagining work, workers, and the workplace
Leading strategies in focus
Build a symphonic C-suite
Mapping out the workforce of
the future is not a task for HR,
operations, IT, or individual
mining sites. It requires the
C-suite to work together
across functions to address
each element of the challenge
from a people, process, and
technology perspective. The
symphonic C-suite is a new
leadership model where an
organization’s top executives
play together as one team,
while leading their functional
teams, to drive more agile
organizations. In this model,
C-suite members not only lead
their own area of responsibility,
but also collaborate with
other functional leaders,
work on teams that affect
the enterprise’s strategic
direction, and influence and
inspire networks of teams
throughout the organization.
For instance, this could see the
Chief Information Officer (CIO)
and Chief Financial Officer (CFO)
working with business leaders,
supply chain executives, and the
Chief Human Resources Officer
(CHRO) to pilot and implement
new automation solutions and
redesign work around these
new platforms.
Manage beyond
the enterprise
As the nature of work changes,
the gig economy is forecast
to grow. This mandates
mining companies to extend
their talent approaches to
gig and contract workers by
giving them performance
goals, secure communication
systems, training and support,
and access to onboarding and
development opportunities.
Rethink rewards
According to recent research,
the current reward system
within most organizations
is broken. To meet shifting
expectations, organizations
are now being called upon to
offer more personal and agile
rewards. This may include
providing raises and bonuses
more than once per year,
offering incentives to contract
workers, and making salary
decisions more transparent.
One European consulting firm,
for example, allows employees
to choose their preferred
rewards, such as salary or
stock options, an extra week
of vacation or higher pay,
or a higher bonus based on
results versus a lower increase
in base pay.47
Think beyond safety
While safety is of paramount
importance, mining companies
committed to retaining
key talent must extend the
definition of employee wellbeing to physical, mental,
financial, and even spiritual
health. This expanded
definition could see companies
emphasizing new priorities,
which may include maintaining
a healthy work/life balance for
staff, avoiding fatigue from 24/7
work cycles (perhaps by using
a “follow the sun” approach
in running remote operating
centers), using wearable
technologies to monitor
workers’ physical health,
providing fitness and stress
management programs, and
strengthening the culture of
diversity and inclusion.
Empower leadership
In the face of flattened and
changing hierarchies, leaders
need the ability to handle
greater cognitive complexity
and must be comfortable with
failing early, failing fast, and
learning faster. If leaders cannot
model these new behaviors,
employees will hesitate to
embrace them, and change will
be relegated to a concept rather
than helping to shape and
drive new workforce realities.
From left field
Millennials value experiential travel and immersive adventures—experiences they could
arguably get working in remote mining locations. Could mining companies possibly attract a
new generation of workers by “selling” these jobs as immersive experiences, and devise more
powerful retention strategies that encourage them to stay?
49
Tracking the trends 2019
9
Operationalizing
diversity and
inclusion programs
From theory to practice
Like many traditionally
male-dominated industries,
mining has an inconsistent
record when it comes to
workplace diversity and
inclusion. In 2016, when
Chile’s Ministry of Mining
conducted a survey of 603
women in the industry, it found
that more than 40 percent
had been subjected to cruel
jokes and wolf-whistling,
20 percent had been groped,
and seven percent had been
sexually propositioned.48
The recent establishment of
a MeTooMining Association,
which is advocating for strong
programs against intimidation,
50
gender discrimination, and
sexual harassment and
violence in the workplace, also
suggests that mining companies
need to take a closer look at
their inclusion strategies.
Positioning for change
Many mining companies have
arrived at a similar conclusion,
and have begun setting
targets for gender equality
and greater cultural inclusivity.
With advances in technology,
such as trucks equipped with
power steering, and automation
that enables the remote
operation of equipment, new
opportunities are opening up
for a very different workforce.
BHP has an aspirational goal to
achieve gender balance across
each of its global operations
by 2025.49 Freeport-McMoRan
continues to work towards its
target to increase women in
its global workforce, as well as
women in managerial roles, to
a minimum of 15 percent.50 For
its part, South32 aims to have
women holding 40 percent of
its senior leadership positions
by 30 June 2020, compared to
31 percent today.51
Meeting these diversity targets
is not only the right thing to
do; it is also sound business
Trend 9: Operationalizing diversity and inclusion programs
practice. According to BHP,
its 10 most-diverse mines
outperformed its other sites
by roughly 15 percent over the
past three years.52 Similarly, in
2016 Rio Tinto reported that
both its safety and equipment
maintenance performance
was higher at its most diverse
operation.53 Most critically,
miners will struggle to meet
their digitization, automation,
and innovation goals if they
cannot attract what is quickly
becoming the most in-demand
cohort of talent in the world,
and doing that will require them
to expand their diversity and
inclusion practices.
Culture and numbers
Setting targets and reaching
them are two different things,
particularly given the lack of
diverse talent in the mining
industry. Even counting the
1,800 women BHP hired in
2017,54 it still needs to recruit
more than 19,000 women
by 2025 to reach its gender
parity target,55 and it must do
so at a time when its global
counterparts are competing for
the same talent.
The challenge then, is not
simply cultural. It is also
numerical. Right now, the
mining industry is not attracting
sufficient numbers of diverse
candidates to truly move the
dial on its diversity and inclusion
strategies. To shift this balance,
companies will not only need to
change their talent attraction
and retention policies. They will
also need to change historical
perceptions about the mining
Diversity and inclusion in action
To meet its aggressive diversity and inclusion targets, BHP has devised a strategy
focused on four core goals: to achieve gender parity, build a flexible work program that
meets the needs of all employees, enhance education and awareness, and develop
more diverse leaders. Rather than confining its program to head office, the company
is re-examining how work is done at its sites by analyzing hundreds of jobs to assess
if they can be performed in more flexible ways. The entire program is underpinned
by the understanding that safety must remain paramount, operational continuity
and productivity will remain unaffected, and opportunities will be generated for all
employees, not just women. After considerable discussion, the company concluded
that some of its job functions could be performed in non-traditional ways. To this end, it
formulated levels of flexible work options and will be rolling the program out imminently.
51
Tracking the trends 2019
Getting tactical
As a first step, mining
companies must adopt
solid strategies to foster
organizational diversity
and inclusion. It’s not that
they haven’t looked at this
issue before. It’s that they
often approach this issue
by adopting point initiatives,
rather than designing
integrated programs to tackle
the challenge holistically.
For instance, while most
mining companies are working
with educational institutions
to interest students in the
industry, their approach is
haphazard and uncoordinated.
As a result, each company is
telling a divergent story, diluting
the core messages they could
otherwise convey if they came
together as an industry to craft
a cohesive narrative.
52
Attraction strategies should also
be geared to a more diverse
audience. Online platforms exist
that help organizations create
advertisements targeted to
specific demographics—which
can help them attract a more
diverse range of candidates.
Gender diversity is not the only
target that mining companies
are introducing. One mining
company is targeting to have
one percent Neurodiversity
in their technology team
in a couple of years. In an
environment where data
scientists, for example, are in
short supply, this may open
up a new stream of talent that
previously was overlooked.
They have introduced new
recruiting, coaching, teaming
and performance strategies
to facilitate an integrated and
tailored new way of working for
these highly talented individuals.
These are the actions that are
required in the pursuit of talent
in today’s environment.
Retention is another area that
needs reform. When companies
do attract women, they often
struggle to retain them, in part
because they fail to deliver
simple solutions—such as
safety equipment designed
to fit women’s bodies, higher
quality accommodation, a
broader variety of healthy
food options, and a wider
range of social activities.
Other programs—such as pay
equity, workplace flexibility,
parental leave, and support for
employees who are acting as
caregivers, must also become
table stakes. To assess which
initiatives work, and which don’t,
companies should track results
so they can analyze outcomes
and adapt accordingly.
Trend 9: Operationalizing diversity and inclusion programs
Diversity and inclusion in action
In a bid to create more employment opportunities for Australia’s Aboriginal community,
Fortescue Metals Group supports a range of programs that have made a fundamental
difference over the years. In 2011, it established its Billions Opportunities program
through which it has awarded 270 contracts and sub-contracts to 110 Aboriginalowned businesses and joint ventures, for a total value of AUS$2 billion (approximately
US$1.44 billion). Fortescue's Vocational Training and Employment Center (VTEC) has
helped over 1,650 Aboriginal people through employment, driving lessons, resume
creation, accommodation, and personal development since 2006. Its Leadership and
Excellence in Aboriginal People (LEAP) initiative offers 12-month formal training that
includes both offsite and onsite education, internal mentoring, and business leadership
training. In financial year 2018 alone, the company spent AUS$230 million (approximately
US$166.29 million) with 52 Aboriginal businesses and 1100 Aboriginal people worked
across their operations.56
Exposing unconscious bias
Beyon